Payments in the sector range from 60 to 90 days; however, they can extend to more than 120 days depending on the market power of individual retailers.

In 2016 consumer durables sales continued to grow, driven by robust GDP and private consumption growth, improved consumer confidence, low inflation and increased availability of consumer credit. Spanish retail sales increased 2.6% year-on-year in 2016. Consumer durable goods are expected to continue their sales expansion in 2017, although at a lower pace than last year, as private consumption and retail sales growth are expected to slow down, to 2.2% and 1.1% respectively.

The recovery of the real estate segment has had a positive influence on home furnishing sales. While turnover growth slowed down in H2 of 2016, it still remained at healthy rates. Benign forecasts for real estate activity suggest that the furniture sales will continue to increase in 2017.

Major domestic appliances (white goods) sales increased 3.8% in value in 2016. A slowdown in sales in H2 of 2016 led to decreased sales prices. Turnover is expected to increase again in 2017, although at a lower level than in 2016.

Profit margins in the consumer durables retail industry have generally remained stable in 2016 after increasing in 2015. On average, payments in the sector range from 60 to 90 days; however, they can extend to more than 120 days depending on the market power of individual retailers. Payment behaviour in the sector was relatively good in 2016, and no major changes are expected, as the general performance outlook remains positive. The insolvency environment is also stable, with no major increases in business failures expected.

Our underwriting approach remains positive to neutral for all subsectors, given the expectation of further growth in 2017. However, competition in the market remains strong, the slowdown in sales growth since H2 of 2016 needs to be monitored, and the industry remains highly dependent on consumer credit. Spain´s current economic rebound remains susceptible to setbacks in a more volatile global environment.